Beary repaid less of consulting fee because of taxes

Orange County Sheriff Kevin Beary's repayment of a controversial consulting fee was $14,050 less than what his agency consistently said he would return.

Up until now Beary has reported that he received $43,000 from a homeland-security company he founded. But that company and a sheriff's spokesman now say Beary actually received only $28,950 because the company withheld taxes. Beary repaid the smaller amount.

The sheriff declined comment on anything related to his relationship with National Domestic Preparedness Coalition Inc. He repaid the money Dec. 31, meeting a deadline he had set months earlier, but the amount did not come to light until late last week.

The off-duty consulting fee was discovered in July in state records and quickly produced the worst public relations in Beary's career. Within days, he promised to step down from the coalition's board of directors and to pay back the $43,000 to end any appearance of wrongdoing.

The money raised questions because Beary told a reporter during his 2004 re-election campaign that he hadn't taken a penny from the publicly funded business. But a month after the election, records and interviews showed he paid himself for hundreds of hours of consulting that he had been tracking.

"The sheriff does not want to talk to anybody because he's given back what he was paid," sheriff's spokesman Chief Steve Jones said late last week.

Confirmation of the sheriff's payment was in a letter written Thursday by the coalition and released last week by the Sheriff's Office.

The letter was written by coalition executive director Kenneth Glantz, who resigned from the Sheriff's Office in early December after 14 years to run the homeland-security business.

Glantz said in an interview that he repeatedly told reporters last year that Beary received only $28,950, but "no one would listen" because it wasn't a "sexy number." However, the lower figure has never been reported by local news media, and Beary's media-relations staff said they didn't learn about the smaller amount until the release of Glantz's letter.

The letter from the coalition said federal law required the business to withhold $14,050 from Beary to pay what he owed for consulting in 2004 to Medicare, Social Security and the Internal Revenue Service.

Local labor lawyers say they are unaware of such a law. Independent contractors, they say, usually set up quarterly accounts to pay their taxes.

"Independent contractors are usually paid a flat fee, and they don't have their taxes withheld," said Paul Scheck, an Orlando labor and employment lawyer. While it is not illegal to withhold taxes from a payment to a contractor, Scheck said, doing so "creates more of an employer-employee situation rather than an independent-contractor situation."

The IRS on its Web site advises business owners, "You do not generally have to withhold or pay any taxes on payments to independent contractors."

Beary, Glantz and Ed Dore, another sheriff's employee, formed the coalition in 2003 with at least $174,000 in public funds to develop and market terrorism-assessment software known as HLS-CAM. The program grades airports, hospitals and public gathering places for susceptibility to terrorist attack.

In 2004, the coalition received a $654,000 federal grant in addition to a $200,000 state contract through the Florida Department of Law Enforcement. Audits and investigations by local, state and federal agencies continue to look at how the venture was launched and how it spent public funds.

Glantz and Dore paid themselves $47,000 and $45,000, respectively, when Beary received $43,000 after last fall's election.

The coalition operates as a nonprofit business and has applied for tax-exempt status. However, it has not received that designation from the IRS; its application is pending, Glantz said.

In his letter last week to Beary, Glantz thanked the sheriff for "your generous and unsolicited donation" and noted that $43,000 was a reasonable and legal consulting fee. He concluded by writing, "NDPCI has never requested or otherwise intended that you repay or donate these funds to NDPCI."

It will be up to the sheriff as to how he chooses to report the $28,950 payment on his 2005 taxes, Glantz said. Beary declined to respond when asked by Jones whether he would seek a tax deduction.